Making a Case for Better Business Results? Be a Better Corporate Citizen

Boston College’s Center for Corporate Citizenship recently released its annual report on the state of corporate citizenship. For corporate social responsibility (CSR) practitioners and advocates, the survey’s findings are most encouraging for making what can sometimes be a difficult business case to make. The report, which surveyed almost 750 executives from medium- and large-sized companies, suggests that a firm’s focus on environmental, social and corporate governance issues can lead to increased financial performance. Going further than “looking good” or have employees “feeling good,” a robust CSR initiative can help increase a company’s market share in the long run and help an organization manage risk.

Some of the key findings of the Center’s report include:

Executives get CSR: Over 80 percent of the executives who participated in the survey indicated that serious environmental, social and governance programs created financial value. Convincing shareholders and investors, however, is often an uphill climb.

Corporate strategy should align with a corporate citizenship plan: Rather than being isolated in a silo, the study found that an integration of a corporate social responsibility agenda with a company’s overall strategic plan led to improved financial performance. In fact, success was about nine times more likely to occur than if a company segregated its corporate and CSR strategies.

The longer the investment in CSR, the larger the payoff: The Boston College survey found that the duration of a corporate citizenship program has an impact on the success of a company’s business objectives. Companies with CSR programs that have lasted a minimum of four years met their business objectives at a rate 30 to 50 percent higher than companies who had only developed a CSR plan of a year or less.

Managers’ buy-in makes a difference: Winning the support of senior executives and managers was critical to the success of corporate citizenship programs. Their advocacy in turn was often matched by the rank-and-file employees at the same organizations. On the other hand, the pressure for good short-term results and the sluggish economy were cited as the biggest hindrances to the success of corporate citizenship plan.

B2B companies are the drivers: Executives from B2C-driven companies were quick to state that they had less confidence that a solid corporate citizenship program can lead to increased shareholder returns. Firms that serve both B2B and the B2C markets tend to develop more strategic corporate citizenship programs and their executives believe their bottom line is better off because of them.

Executives who dismiss the long term effectiveness of environmental, social and governance programs do so at their companies’ peril. Companies who engage with stakeholders, commit to transparency, give to local communities, work on waste diversion and develop employee and supply diversity programs end up performing very well. Just ask Nike, Cisco and UPS.